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Economics Chapter 2
Terms in this set (30)
the method used by a society to produce and distribute goods and services.
the income people receive for supplying factors of production, such as land, labor, capital or entrepreneurship.
a set of government programs that protect people experiencing unfavorable economic conditions
standard of living
level of economic prosperity.
an economic system that relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it.
economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets.
centrally planned economy
economic system in which the central government makes all decisions on the production and consumption of goods and services.
economic system which combines elements of traditional, market and centrally planned economies.
an arrangement that allows buyers and sellers to exchange things.
the concentration of the productive efforts of individuals and firms on a limited number of activities.
a person or group of people living in the same residence.
an organization that uses resources to produce a product, which it then sells
the arena of exchange in which firms purchase the factors of production from households.
the financial gain made in a transaction.
the market in which households purchase the goods and services that firms produce.
an individual's own personal gain.
the hope of reward or fear of punishment that encourages a person to behave in a certain way.
the struggle among producers for the dollars of consumers.
term economists use to describe the self-regulating nature of the marketplace
The idea that consumers ultimately dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase).
an economic system based on state ownership of capital.
an economic system in which the central government directs all major economic decisions
a government in which one leader or group of people holds absolute power
large farm leased from the state to groups of peasant farmers.
industry that requires a large capital investment and that produces items used in other industries
policy allowing business to operate with little or no government interference
economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference
a range with no clear divisions
period of change in which an economy moves away from a centrally planned economy toward a market-based system
to sell to individuals state-run firms, which are then allowed to compete with one another in the marketplace
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